District faces insolvency if current funding system unchanged, officials say

2008-09 budget includes $10 million deficit, $19 million payment to state

ANNETTE BAIRD, Chronicle Correspondent

Published
5:30 am CDT, Thursday, May 1, 2008

The Spring Branch school district is facing insolvency in four to seven years if the current school funding system remains in place, district officials warned.

The funding issue reared its head again as the board prepares to adopt the its 2008-09 budget, which has a $10 million deficit and includes a projected $19 million payment to the state to help fund poorer school districts under the school funding formula.

The district on April 28 held the first of two public hearings about the budget, which drew no response from the public.

A second public hearing is scheduled for May 21, after which the board is expected to adopt the budget.

The district's budget is projected to be $269 million next year, with revenues are projected at $259.3 million.

It means the district will have to dip into reserve funds or raise taxes, neither of which is palatable to the district or the board, nor in the case of reserve funding, sustainable.

"We are opposed to a tax increase," Superintendent Duncan Klussmann has said in the past.

The so-called "Robin Hood" payments and steep increases in health insurance, other benefits, fuel and utilities are the main factors driving up costs in what Klussmann described at an earlier budget workshop as a lean budget.

About 80 percent of the budget covers salaries and staff benefits.

The budget includes a 3 percent increase for staff and incorporates salaries for an additional six custodians and 25 technology support staff for campuses.

The budget also includes funds to pay for stipends for math and science teachers.

About 69 percent of revenues will come from the state next year, while most of the rest will come from local property taxes.

A fraction will come from other local sources and the federal government.

The tax rate is already set to rise by 7 cents next school year to $1.35 following the voter approved $597 million bond in November.

The current tax rate is $1.285 per $100 valuation.

District officials and trustees blame the current school funding system for the fiscal crisis they say school districts around the state are facing.

The state's share of funding for school districts was set at the 2006-07 rate under House Bill 1 and does not allow for inflationary costs.

To continue to cover rising costs, districts will be forced to raise taxes or dip into reserve funds.

"This is definitely a result of (Texas) House Bill 1," said Mike Falick, board president.

"We and every other school district in the state, if the legislature doesn't address inflation, face an unsustainable deficit."

Klussmann has called it "a train wreck on the horizon."

Both Klussmann and Falick hope the legislature will address school funding in the next session in January 2009.

During the April 28 meeting, the district recognized 45 students from prekindergarten through 12th grade with a "Character Without Question Award" for displaying outstanding character and positive actions. Trustees also approved contracts worth $5.5 million, including $2.8 million for technology and $400,000 to cover increases in petroleum costs.